Nucor Earnings Boosted by Energy, Auto and Construction Markets

By Tess Stynes 

Nucor Corp. said its fourth-quarter earnings rose 23% as stronger selling prices and shipments boosted the steelmaker's revenue.

Nucor, like other steelmakers, has benefited from stronger energy, automotive and construction markets. Last year Nucor also expanded its presence in the energy market with its $770 million acquisition of Midwestern steel mill Gallatin. However, a recent drop in oil prices potentially could decimate a steel industry segment that has been built up over the past few years to supply oil-and-gas drillers in places like the Marcellus Shale and the Gulf of Mexico.

Nucor in December had offered a subdued fourth-quarter outlook, citing losses from its Louisiana business caused by equipment failure. The Charlotte-based company on Tuesday said that the production at the Louisiana operation remains suspended as the company makes repairs. Nucor estimated that the Louisiana business won't be operational until late in the current quarter.

Looking ahead, Nucor expects that its first-quarter earnings will decline sequentially to a level slightly higher than the year-earlier quarter, when Nucor reported net income of $111 million, or 35 cents a share. Analysts polled by Thomson Reuters recently expected 62 cents.

The company also stated that it anticipates its steel mills business will be impacted by customer inventory reductions spurred by the recent drop in oil prices, but that it expects energy-sector demand to improve once inventories are diminished. Nucor also said it continues to see positive trends in nonresidential construction markets.

Overall, Nucor reported a profit of $210.4 million, or 65 cents a share, up from $170.5 million, or 53 cents a share, a year earlier. The latest period included an inventory-accounting related credit of 11 cents a share. The year-earlier period included a gain of seven cents a share related to deferred-tax-related adjustment. The company expected per-share earnings of 50 cents to 55 cents.

Revenue increased 2.2% to $5 billion, below expectations of analysts polled by Thomson Reuters for $5.38 billion.

Average selling prices rose 1% and total steel mills shipments rose 2%.

Earlier Tuesday, AK Steel Holding Corp. reported that its fourth-quarter revenue rose 36% on sharply higher shipments spurred by strong automotive sector demand and a boost from a recent acquisition.

On Monday, U.S. Steel Corp. said Monday it will temporarily curtail operations at two plants in Alabama and one in Texas, potentially affecting 1,918 workers, as the collapse of oil prices leads oil and gas drillers to cancel orders for steel pipes and tubes made at the sites.

U.S. Steel is set to report after the market closes. Steel Dynamics Inc. is expected to issue its fourth-quarter earnings report Wednesday after the bell.

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